Page 151 - CA Inter Audit PARAM

CA Ravi Taori
The internal audit function may be assigned specific responsibility for reviewing controls,
evaluating their operation and recommending improvements thereto. In doing so, the
internal audit function provides assurance on the control. For example, the internal audit
function might plan and perform tests or other procedures to provide assurance to
management and those charged with governance regarding the design, implementation and
operating effectiveness of internal control, including those controls that are relevant to the
audit.

• Review of compliance with laws and regulations.
The internal audit function may be assigned to review compliance with laws, regulations and
other external requirements, and with management policies and directives and other internal
requirements.

• Examination of financial and operating information.
The internal audit function may be assigned to review the means used to identify, recognize,
measure, classify and report financial and operating information, and to make specific inquiry
into individual items, including detailed testing of transactions, balances and procedures.

QNO— Scope of Internal Auditor - Case Study New Course – (SM25)
610.01.50 Bhaskar CNO - SA610.020
A company has stipulated a control through its automated software that interest @ 12% p.a. is charged in
case of those customers who fail to make payment within a month of a sales transaction. The internal
auditor of the company finds that during a certain period, software has failed to charge interest due to
certain technical glitches. Does reporting of above situation fall in domain of internal auditor’s work?
Answer The objectives and scope of internal audit functions typically include assurance and consulting activities
designed to evaluate and improve the effectiveness of the entity’s governance processes, risk management
and internal control.

➢ Activities Relating to Internal Control
• Review of operating activities:
The internal audit function may be assigned to review the economy, efficiency and
effectiveness of operating activities, including nonfinancial activities of an entity.

• Evaluation of internal control:
The internal audit function may be assigned specific responsibility for reviewing controls,
evaluating their operation and recommending improvements thereto. In doing so, the internal
audit function provides assurance on the control. For example, the internal audit function might
plan and perform tests or other procedures to provide assurance to management and those

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